2020 Personal Tax Checklist
It will soon be time to file your 2020 personal tax return. Please download the checklist which will assist you in assembling the necessary information required to complete returns for you and any family members. Please review the checklist carefully and gather together all of the applicable information and tax slips.
In addition to our checklist, please consider the following important information:
Home Office Deduction
If you were employed in 2020, you may be able to claim a new deduction for home office expenses if you worked at home due to the COVID-19 pandemic. Most people will likely claim this deduction using the new “flat rate” method which generally only requires you to identify how many days you worked at home in 2020. There is also a more detailed method available for those that have significant home office costs, however it requires additional work to calculate this deduction as well as additional record-keeping. As noted in our checklist, please state which method you would like to claim and provide as much of the additional information as possible to minimize any additional tax return preparation fees, especially if you would like to claim the more detailed method.
Principal Residence Exemption
Starting with the 2016 taxation year, all dispositions of a principal residence must be reported on your personal income tax return, even if it was your principal residence during each year of ownership. Failure to report the disposition may result in the capital gain on the disposition being subject to income tax. There is also the potential for late-filing penalties if the disposition is not reported on your 2020 return.
If you have disposed of your principal residence during 2020 and/or began renting out a portion or all of your principal residence in 2020, please ensure you provide this information to us.
T1135 Foreign Reporting Requirements
Canadian taxpayers who held specified foreign property with a cost amount of over $100,000 CAD in total, at any time in the taxation year, are required to provide additional information to the Canada Revenue Agency (“CRA”). Please see the enclosed checklist for more details.
Electronic Filing Requirements
Please note that we are required to file most personal tax returns electronically due to the mandatory filing requirements of CRA. Accordingly, all copies of your receipts will be returned to you with your copy of the tax return and we will not retain copies of the receipts. It is very important that you retain the documents for at least 7 years should CRA request proof of amounts claimed.
Penalties for Unreported Income
CRA levies a significant penalty if a taxpayer fails to report income for two taxation years within a four-year period. If you have been reassessed for additional unreported income in the last three years, be extremely careful that all of your information slips are provided to us. It is your responsibility to ensure the completeness of your personal income tax return. If you receive any additional slips after filing your return, please send them to us so that a T1 Adjustment Request can be filed.
If you have any questions concerning the material required for the completion of your return, please do not hesitate to contact our office.